TARTU - Although India may be far ahead, Estonia is rapidly becoming a software haven for an increasing number of brain-hungry companies looking for people to write their computer programs.
"The Americans had no clue as to what or where this Estonia actually was," says Tan Silliksaar, head of software developer Vihmapuu OU. Three years ago, he stumbled upon a job advertisement from Raintree Systems Inc., a U.S.-based company providing software solutions for the healthcare and social services industries. Vihmapuu got the job and has gradually taken over all of Raintree's software development activities, now employing 29 people in Tartu.
"Our software has 15,000 licensed users, which is a relatively large number for a niche product and would be quite a feat in Estonia," notes Silliksaar. "But the U.S. market, of course, is virtually unlimited."
"We are currently bidding to provide software solutions for the whole health insurance system of the state of California," he adds. Possible victory would entail the biggest contract in Raintree's history and create at least new 20 programming jobs in Tartu.
While scoring these large projets makes for good news, on the flipside Estonian companies face a troubling labor shortage. Vihmapuu is currently preparing a training program in cooperation with local authorities. "There is no school whatsoever for programmers," says Silliksaar. Projects such as the government-sponsored Estonian IT College, launched in 2000, are yet to yield actual results, and the college's current student body of 350 is merely a drop in the sea.
A few miles away from Vihmapuu's premises, large sections of an elite office building accommodate Playtech Estonia, a subsidiary of an Israeli-based online gambling solutions provider operating through Cyprus. Founded in 1999 by a group of Tel Aviv tech-heads, Playtech has rapidly emerged as one of the world's leading gaming software hubs, whose client base includes dozens of virtual gambling houses in Europe, Asia and worldwide.
According to the Playtech.com Web site, it employs 115 people worldwide. It's Tartu operation is said to employ some 80. Typically for the gambling business, it seeks to maintain a low media profile, but is considered to be among Estonia's largest software developers.
Playtech's merchandise consists of a software package for all online gaming needs, from payment processing to potential interactive communication between gamers and service personnel. All this is complemented by an ever-growing variety of virtual slot machines that can be "glued on" to the system at will.
Meanwhile, Tallinn is still home for Estonia's star codewriters Ahti Heinla, Priit Kasesalu and Jaan Tallinn. These programmers were the masterminds behind KaZaA, the world's most downloaded peer-to-peer, or P2P, software that enables computer users to swap music and video files. Their most recent feat is Skype, a program that allows people to make phone calls - even internationally - via the Web at no cost at all. Unlike similar applications of the past, Skype excels in sound quality and, not least, is free from distracting advertisements.
"Skype is really doing exceptionally," said Tallinn. With a download count of over 5 million in just a few months, this appears to be anything but exaggeration.
This is but one application of the locally grown P2P technology, which could revolutionize the e-industry, replacing costly servers, centralized user databases and other technology with "virtual hardware" that relies on computers of the software's users.
While similar examples are plenty, some argue that Estonia lacks actual business ideas that would yield "home-made" products, add more value and perhaps even ease the country's massive foreign trade deficit. Funding for software development, though, is no problem.
"I could point out a dozen financing sources in just a minute," says Meelis Niinepuu, consultant and partner at Innopolis, a Tartu-based consulting firm specializing on EU funds that shall be available to Estonia as of its accession to the European bloc this May. "Yet there just is nothing to finance."
After a few moments, however, he admits that recent months have brought some improvement. "But it's too early to talk about those projects yet."